- Three private equity players have united for a $4.7bn all-cash bid
- This includes Signature’s largest shareholder, Cascade Investment
Signature Aviation (SIG) has been the subject of a private equity bidding war, as Global Infrastructure Partners (GIP), Blackstone and Bill Gates’ wealth manager Cascade Investment Fund have all vied to the take the jet servicing group private.
In mid-January, it appeared that GIP had emerged victorious after Signature accepted its fifth takeover offer of 550¢ (405p) cash per share, valuing the group at around $4.6bn. GIP – which owns stakes in Gatwick Airport and the Hornsea 1 offshore wind farm – edged out Blackstone and Cascade, which had teamed up to pursue a possible joint offer at 517¢ a share.
But Blackstone wasn’t ready to concede defeat. As with GIP, the private equity giant has been especially keen to snap Signature up, and the 517¢ proposal made public in December was its sixth approach since February 2020. Hoping to bring the takeover tussle to an end, it has now joined forces with GIP and Cascade, and together they have tabled an improved 562¢ per share all-cash bid. This is a 53 per cent premium to Signature’s closing share price on 16 December, the day before the bidding war was first unveiled.
Signature is recommending shareholders accept this sweetened offer and the group’s chairman, Sir Nigel Rudd, believes that the consortium’s proposal “represents an attractive and certain value in cash today for Signature shareholders reflecting the high quality of the business and its network, its people and its future prospects”.
Indeed, the takeover interest comes as the private jet industry has proved more resilient to the Covid-19 crisis than commercial flight activity, with wealthier customers and corporations willing to pay to avoid contact with hordes of other passengers. According to aviation data specialist WINGX, the number of business jets in operation globally was down just 9 per cent year on year in January, versus a 50 per cent year-on-year decline for passenger aircraft.
Signature is well placed to capitalise on this relative strength as the world’s largest fixed-based operator for business and general aviation travel. It offers refuelling and maintenance services for private jets at more than 370 locations around the world.
The race may not yet be over as rival private equity group Carlyle has also been mulling a bid. But it would be more difficult for any Carlyle proposal to reach the required threshold of 75 per cent shareholder approval as Cascade has agreed to vote against any competing bid. Cascade is Signature’s largest shareholder, and together with the Bill and Melinda Gates Foundation Trust, it holds a 19 per cent stake. Reflecting this hurdle, Signature’s shares are hovering around the sterling equivalent of the consortium’s offer at 412p, suggesting that investors believe a higher bid is unlikely. Await documents.
Last IC View: Hold, 438p, 11 Jan 2021